R&D Answers: Will The Coalition Government Scrap R&D Tax Credits?

Date: 7th February 2012

Are Research and Development Tax Credits Under Threat From The New Coalition Government?

The Conservatives originally announced that they would scrap Research and Development Tax Credits. However, a few weeks before the election, and following their Dyson Review on Innovation, they announced that they will not scrap the scheme.

In fact in a startling move since coming to power the coalition government announced an increase in the R&D Tax Credit rate to 200% in April 2011 and pre announced that it will go up again in April 2012 to 225%. Great news for innovative small and medium enterprises.

In the year to April 2012 ( latest HMRC figures ) 9920 SMEs claimed R&D Tax Credits. This rose from about 8280 in the previous year.

In that year HMRC paid out about £1.2b in cash credits and CT relief, of which c35% was paid to SMEs, with the rest going to large companies. Since introduced for SMEs in April 2001 (April 2002 for Large Companies), more than £8billion has been paid or given in relief.

The average claim value is about £43k with the average for technology companies being about £10k higher.

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